Deadline Tomorrow: N4.6trn banks’ recapitalisation sparks sectoral battle for funds
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By Babajide Komolafe, Economy Editor, & Peter Egwuatu, Assistant Business Editor
Nigeria’s banking industry is entering a new phase of intense competition as 33 banks that successfully raised about N4.6 trillion under the Central Bank of Nigeria, CBN’s recapitalisation programme position to deploy the funds, triggering what analysts describe as a sectoral battle for profitable lending opportunities.
Findings showed that the capital raise, achieved through a mix of rights issues, public offers, private placements and strategic investments, enabled the banks to beat the regulatory deadline, significantly strengthening their balance sheets and capacity to finance large-ticket transactions.
The N500 billion Titans: International banks lead charge
Under the new minimum capital requirements of the CBN, commercial banks with international authorisation were required to hold a minimum of N500 billion in paid-up capital, a 900% leap from the previous N50 billion requirement.
Despite initial skepticism regarding the ability of the market to absorb such a heavy capital call, the “Big Seven” have not only met the target but also in several instances, surpassed it.
Access Holdings Plc set the pace as the first financial institution to successfully execute a fully digital Rights Issue, leveraging the NGX’s E-offer platform to raise N351.01 billion.
This move pushed Access Bank’s share capital to N600 billion, N100 billion above the regulatory floor, positioning it as the first to “breast the tape” ahead of the March 2026 deadline.
Hot on its heels, Zenith Bank Plc demonstrated its market dominance by raising N289.44 billion through a combined Rights Issue and Public Offering.
Group Managing Director, Dr. Adaora Umeoji, noted that the lender’s recapitalisation was focussed on driving “exponential growth” and expanding its footprint into the Francophone African region via its new Paris subsidiary.
Zenith’s total capital base now stands at a formidable N614.65 billion.
Other international players followed suit with similar vigour. Guaranty Trust Holding Company, GTCO, successfully increased GTBank’s paid-up capital to N504 billion through a subscription exercise totaling N365.85 billion.
GTCO notably became the first West African financial institution to dual-list on both the NGX and the London Stock Exchange, LSE, during this cycle, securing $105 million from international institutional investors.
Fidelity Bank also emerged as a standout performer, raising N272.95 billion through a combined offer that saw a staggering 237% oversubscription for its public offer and 137.73% for its rights issue. United Bank for Africa, UBA; First City Monument Bank, FCMB; and First Bank have similarly confirmed their status, with First Bank targeting a total paid-up capital of N748 billion through private placements.
National and regional resilience
The story of the national and regional tiers is one of strategic consolidation and parent-company support. National banks, required to hit a N200 billion mark, saw intense activity.
Stanbic IBTC Holdings successfully met the requirement, following a Rights Issue that raised N181.4 billion, reflecting a 21.9% oversubscription rate.
For foreign-owned entities such as Ecobank Nigeria, Standard Chartered, and Citibank, compliance was largely facilitated through parent-company support and international note taps.
Ecobank, for instance, bolstered its position with a $125 million tap from existing notes through its parent, Ecobank Transnational Incorporated.
A major highlight in the national category was the merger between Providus and Unity Bank. To facilitate this, the CBN provided a N700 billion financial accommodation to secure the new entity’s stability.
Meanwhile, Wema Bank successfully shored up its capital to exceed N200 billion through a N150 billion rights issue and special placement.
In the regional and merchant tiers, where the requirement was raised to N50 billion, players such as Nova Bank, Parallex, and Titan Bank all capitalised to meet the new floor.
Merchant banks, including Rand Merchant Bank, Coronation, and FSDH, have similarly aligned their capital positions.
The Non-interest banking revolution
The non-interest segment has seen remarkable growth. Jaiz Bank, the pioneer in the field, is leading the segment with a capital base of N47.9 billion, more than double the N20 billion requirement for national non-interest banks.
This was bolstered by a successful N10.04 billion private placement listed on the NGX. Others in this category, including Lotus Bank, Taj Bank, and The Alternative Bank, have all met their targets, while Summit Bank qualified as a regional non-interest bank with N15.3 billion.
Outlook on returns
However, attention has now shifted from capital mobilisation to deployment efficiency, with experts stressing how and where the funds are invested will ultimately determine returns to shareholders.
Head of Equity Research at Quest Merchant Bank, Tunde Abidoye, said the immediate outlook for returns might be modest, despite the strong capital position.
“It’ll take a while for the banks to generate adequate returns on the funds. Typically, return on equity, ROE, declines in the first year of recapitalisation due to higher equity levels. Most banks’ ROE will likely normalise by 2027,” he said, adding that 2026 performance would likely be “depressed” before rebounding to about 20-25 per cent.
On deployment strategy, Abidoye identified high-growth sectors such as ICT, finance, oil and gas, and real estate as key targets, but emphasised the need for strong risk management.
“Banks must be profitable on a risk-adjusted basis, paying attention to market risks such as oil prices, credit risk, and emerging risks, including climate and geopolitical developments,” he added.
Echoing similar sentiments, Ayokunle Olubunmi of Agusto & Co advised banks to leverage their areas of strength.
“Each bank should focus on sectors where it has a strong understanding while gradually exploring others. Returns will depend on the risk profile of the assets and sectors they choose,” he said, noting that balancing short-term returns with long-term growth was critical in a volatile environment.
Shareholders temper expectations
Shareholders, however, are lowering expectations in the near term, warning that returns might take time to materialise, given regulatory constraints, macroeconomic headwinds and the gestation period required for productive investments.
National Chairman of New Dimension Shareholders Association of Nigeria, Patrick Ajudua, said: “The banks can only begin to generate returns once the CBN gives full clearance for utilisation of the funds. For many shareholders, expectations are tied to the 2025 and subsequent financial results.
“Returns are not cast in stone; they depend on how well the funds are deployed and the economic environment. But given the quantum of capital raised, we expect a geometric progression in earnings per share over time.”
Ajudua further urged cautious deployment, stressing “it is better for the funds to be channelled to relatively low-risk sectors such as manufacturing, consumer goods and commerce, especially with improving foreign exchange stability.”
Similarly, Chairman of Progressive Shareholders Association of Nigeria, Boniface Okezie, warned that macroeconomic realities could erode value if funds were not carefully deployed.
“N4.6 trillion is a lot of money, but inflation can eat into it. The banks must be very strategic. They should deploy more into the real sector and agriculture to boost production, exports and job creation,” he said.
Okezie also highlighted timing concerns, saying “many banks may not even have full access to the funds yet due to regulatory processes. So shareholders are not expecting immediate returns. There must be a gestation period, such as planting before harvest.”
On risk exposure, he cautioned: “Banks must be careful with oil and gas lending and even government financing. These areas have shown risks in the past. Any exposure must be properly evaluated to avoid eroding shareholders’ funds.”
Also, National Coordinator of Independent Shareholders Association of Nigeria, Moses Igbude, stressed the need for efficiency and accountability.
“Having raised the money, the banks must work to deliver value. That is the essence of investment. They should deploy funds into critical sectors-agriculture, solid minerals, manufacturing and even the blue economy-while also exploring opportunities across Africa, especially for banks with international licences.”
Igbude, who called for stronger regulatory oversight, said: “The CBN must remain vigilant. Chronic debtors should be identified and barred, while loan defaulters should be sanctioned to protect the system.”
CPPE pushes real sector agenda
Meanwhile, the Centre for the Promotion of Private Enterprise, CPPE, has intensified calls for a strategic redirection of bank lending towards the real economy, warning that the impact of recapitalisation could be limited without stronger financial intermediation.
Chief Executive Officer of CPPE, Dr. Muda Yusuf, said: “The recapitalisation has been orderly, non-disruptive and confidence-enhancing. It has strengthened the resilience of the banking system significantly.”
However, cautioning that the real test laid ahead, Yusuf said: “The critical question is whether this stronger banking system will support the real economy. At the moment, the linkage remains weak.”
Heb pointed out structural gaps, thus: “Private sector credit to GDP is still low, and SME financing is extremely inadequate, despite SMEs contributing about 50 per cent of GDP and over 80 per cent of employment.
“Consumer credit is also very low, which constrains demand across the economy. This shows a disconnect between banking system strength and economic productivity.”
To address this, he recommended targeted reforms, saying “banks and policymakers must prioritise increasing credit to SMEs, de-risk lending through guarantees, and incentivise long-term financing for sectors like manufacturing, agriculture and infrastructure.”
Yusuf also raised concerns about credit structure and allocation, adding that “a significant portion of lending is short-term, which does not align with the needs of productive sectors. We need more long-term financing to drive industrialisation and economic transformation.”
On policy direction, he said: “There is also the issue of crowding-out by government borrowing, high interest rates and stringent collateral requirements. These must be addressed to unlock real sector growth.
“The priority must shift from capital adequacy to economic impact. Nigeria needs not just stronger banks, but banks that work for the economy.”
As banks begin to deploy the N4.6 trillion war chest, industry watchers say success will depend on how effective institutions balance risk, returns and developmental impact in an increasingly competitive and uncertain environment.
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